Fairfax County Retirement Systems Confirms Investment In Crypto Lending To Boost Yields
- Fairfax County Retirement Systems has decided to invest in crypto lending, a project where investors stake their funds, loan them to others, and receive interest on the same.
- The fund has been greenlit to invest $70 million across two crypto yield farming funds in a bid to boost returns.
The crypto market’s downturn has not deterred the plans of Fairfax County Retirement Systems to dive deeper into the crypto space. Fairfax County’s $6.8 billion valued pension fund has recently obtained the green light from its board of trustees to invest $70 million across two crypto yield farming funds in a bid to boost returns.
During an interview with Financial Times, the chief investment officer of the Fairfax County Police Officers Retirement System, Katherine Molnar, commented on the ongoing bear market, which has resulted in several lending platforms filing bankruptcies, by stating:
“Things will bounce back, and stronger technologies will probably survive.”
Molnar finds some of the yields in a yield farming strategy “really attractive” because several companies have stepped back from that space.
Notably, following the demise of the algorithmic stablecoin UST and its sister token Luna from the Terra ecosystem, the crypto lending market began to fall apart. This incident effectively accelerated the start of the “crypto winter,” causing a sell-off across the market and a wave of withdrawal seizing by platforms, eventually ending up filing bankruptcy.
“For those that are still willing to provide liquidity, decent profit seekers, they’re actually able to earn more attractive yields at the moment,”Molnar added.
It is important to note that the new investment plans announcement comes around a month after two retirement funds – the $5 billion Fairfax County Employee Retirement System and the $1.8 billion Fairfax County Police Officers Retirement System – announced that they would be investing $35 million each in the digital yield fund of Parataxis Capital and the new finance income fund of VanEck.
Fairfax County’s previous investments
Interestingly, before deciding to venture into yield farming, the two above-mentioned retirement systems were already crypto investors. The Morgan Creek Blockchain Opportunities Fund received the first $10 million and $11 million investments from the pension funds in 2019, a year after they learned about the technology’s potential. The systems revealed that their initial investments in the crypto market were expected to go down by 50% amid the ongoing crypto winter, but it would still result in a profit of 350%.
The Fairfax County Employees’ investment chief, Andrew Spellar, said as the company grew more at ease in the crypto sector, it began to consider how it might be able to apply digital asset strategies to other areas of the portfolio.